CME Group sues to block Dodd-Frank swap reporting rules

Exchange seeks permanent injunction

CME Group logo CME Group logo

CME Group Inc., the world’s largest futures market, sued the U.S. Commodity Futures Trading Commission, challenging cleared-swaps reporting requirements imposed under the Dodd-Frank financial reform legislation.

CME, in a lawsuit filed today in federal court in Washington, seeks a permanent injunction against rules requiring registered derivativesclearing organizations, or DCOs, such as itself, to provide nonpublic reports of cleared swap transactions to a new swap data repository established under the act. CME has until Nov. 13 to comply.

The rules “would impose costly, cumbersome, and duplicative requirements on DCOs,” CME said in the complaint.

CME said it objects to the reporting requirement because the data is already “directly and readily available” to the CFTC through the exchange. Chicago-based CME calls the rule unnecessary and duplicative and argues that the commission failed to say whether it had conducted a cost-benefit analysis of the regulation.

The case is one of several brought by the financial industry as it pushes back against tighter regulations passed in the wake of the 2008 credit crisis. In September, a federal judge rejected a commission rule curbing derivatives speculation.

Steve Adamske, a CFTC spokesman, didn’t immediately respond to an e-mail message seeking comment after regular business hours.

CME Group guarantees interest-rate and credit-default swaps with its clearinghouse. The company also backs futures trades based on interest rates, equity indexes, commodities and currencies.

Reduce Risk

The Dodd-Frank Act, the financial overhaul enacted in 2010, aims to reduce risk and increase transparency in the $601 trillion swaps market after largely unregulated trades contributed to the 2008 credit crisis. Clearinghouses, which are capitalized by their members, guarantee trades by standing between buyers and sellers.

The case is Chicago Mercantile Exchange Inc. v. U.S. Commodity Futures Trading Commission, 12-cv-01820, U.S. District Court, District of Columbia (Washington).

Bloomberg News

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